The disbursing of small credit amounts is hailed as prime pathway out of poverty. But is it really? The case for their high interest rates is poor, the claim of high repayment rates doubtful. I found many former customers entrapped in a vicious cycle of loans. Lastly, micro-credit loans played their part in changing the consumption pattern of rural people, and, in passing, reshaped their life style by integrating them with the international capitalist system.

Nepal has increasingly become a place of great power competition between its neighbors India and China. Both the decision not to allow the Tibetan refugee population to vote for its government-in-exile in March of this year and the recent visit of the Chinese army chief who promised a military aid package worth $19 million indicate strong Chinese presence. As India moves to counter Chinese actions, political progress in Nepal will be undermined.

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